Hosting the Olympics Is a Bad Deal

But some cities still do want to do this, right?

The main answer is that you have the construction industry executives deciding that this would be a wonderful thing for their industry. They’re going to get billions of dollars of contracts. They can line up, of course, the trade unions, and some investment bankers. They hire a consulting firm to do an economic impact study, which uses a faulty methodology and makes some unrealistic assumptions. And they come out with “By golly, this is going to put our city on the map.”

So this is about misalignments?

If, say, Deloitte were to come out, having been hired by a chamber of commerce, and say, “This is a crazy idea. Your city should never do this,” they are never going to do another economic impact study for a megastar sport event. So this is their modus operandi.

What about the $4 billion the I.O.C. gets from broadcasters?

Individual members don’t make anything, except that they’re treated to hospitality. The I.O.C. has an immense and elaborate operating structure with all sorts of subcommittees and subagencies. So their operating costs are quite substantial. It’s probably somewhere in the order of 15 percent of their total revenues over a four-year Olympic cycle.

Do you think the broadcasting rights will gain or lose value in the future?

Well, are we going to start betting on the Olympic Games? Certainly the Supreme Court decision invalidating the Professional and Amateur Sports Protection Act is an indication that sports betting is going to hit all of the sports leagues. This could be a big revenue-generating item for broadcasting rights fees.

The next Olympic Games will be in Beijing this winter. How do you expect it to fare?

I imagine there’s an enormous amount of political pushback to the I.O.C. for having selected Beijing. Of course, they only had a choice between Beijing and Almaty, Kazakhstan. It was a Hobson’s choice.

Will Beijing make money?

They’re doing some really crazy, crazy things. They’ve selected two venues 60 and 120 miles to the north of Beijing to host the Nordic and Alpine skiing events. Both of those areas are arid — not far from the Gobi Desert. They have to invest tens of billions of dollars in a water transfer system because they’re going to have to use artificial snow. None of that’s going to appear in the Olympic budget. It’s extremely stupid to spend that kind of money to promote skiing in the north of China when it’s not a very popular sport. They admitted to spending $44 billion for the 2008 Summer Games.

How much are the Olympics about countries and cities demonstrating political power?

It’s hard for me to imagine that President Xi thinks that this is going to put Beijing on the map. One of the things we learned in 2008 was that Beijing was horrifically polluted, and we learned much more about repression in China because of the Games’ being broadcast.